Hiring at a Glance

Spain is a major Western European economy (ranked 5th in the EU) with a highly educated, multilingual workforce. Its growing tech scene and EU membership make it attractive for investment. Compared to Germany or France, living costs and salaries are lower, giving foreign employers competitive hiring costs. For example, Spain’s 2025 minimum wage is €1,184 per month (in 14 payments). Spain follows the Workers’ Statute and numerous collective bargaining agreements; employers must be mindful of regional regulations. Many non-Spanish companies use an EOR to handle the paperwork and avoid registering a local subsidiary.

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Key Characteristics of the Talent Market

Spanish talent is diverse and skilled, particularly in tech and services. Cities like Barcelona, Madrid, and Valencia have strong developer and engineering communities. Spain also has clusters in aerospace, automotive, and renewable energy. The workforce tends to be younger and highly educated – Spain has many university graduates in IT, engineering, and business. Language skills are an asset: many Spanish professionals speak English and other European languages. Labor protections are robust: employees enjoy at least 30 days paid vacation, numerous public holidays (14 per year), and strong unemployment and social benefits.

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Most In-Demand Skills in 2026

Spanish employers increasingly seek software developers, data analysts/scientists, and cloud engineers, reflecting global tech trends. Other top roles include cybersecurity specialists, AI/machine learning engineers, and digital marketing experts. In addition, finance and business operations skills are needed in Madrid’s and Barcelona’s financial sectors. Due to Spain’s service economy, there is also demand for customer support (especially multilingual call centers) and healthcare professionals (nurses, doctors).

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Top Universities Supplying Talent

Spain’s leading universities include the University of Barcelona and the Autonomous University of Madrid, which are among the highest-ranked nationally. (For instance, THE ranks UB and UAM in the global top 300–400 range.) Other top institutions: Polytechnic University of Catalonia (BarcelonaTech) and Universitat Politècnica de València, known for engineering; and business schools like IESE and ESADE for management. These institutions produce many engineers, scientists, and business graduates each year.

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Salary Benchmarks for Roles

• Software Engineer: EUR 40,000–70,000 per year (gross)
  
• Data Analyst: EUR 35,000–60,000 per year
  
• IT Project Manager: EUR 50,000–80,000 per year
  
• Finance/Accounting Analyst: EUR 30,000–50,000 per year
  

Salaries in Madrid and Barcelona tend to be at the high end; smaller cities and rural areas pay less. These are base salaries; typical benefits include food vouchers, transportation allowance, and an annual bonus. Note: Spain usually pays wages in 14 installments (including two “extra” months), so budget accordingly.

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Employer of Record vs Legal Entity Setup in Spain

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To Legally Hire Employees, a Company Must

• Register for payroll with tax and social authorities. An employer must obtain a Spanish payroll tax number and register with the Seguridad Social (Social Security) to make contributions. Every new hire is reported to Social Security before they start work. Employers also withhold monthly IRPF (income tax) from wages.
  
• Issue a written contract in Spanish. By law, indefinite and fixed-term contracts (over 4 weeks) must be in writing. Contracts must cover all mandatory terms (salary, hours, vacation, etc. as per the Workers’ Statute) and comply with any relevant collective agreement (e.g. industry-specific CBAs). Failure to provide a contract or to register short-term contracts with authorities can result in fines.
  
• Apply collective agreements and local laws. Spain has many CBAs (national, regional, sectoral). Employers must use the correct agreement’s rules (minimum wage rates, working conditions, overtime rules). Common compliance issues arise from applying the wrong CBA or misunderstanding union-negotiated rules.
  
• Withhold social security and income taxes. Every payroll run requires withholding the employee’s share of Social Security contributions (around 6.35% combined as of 2023) and income tax (IRPF, which varies by employee). Employers then pay the employer’s share (about 29–30%) in Social Security.
  

These steps ensure legal compliance. For instance, Oyster’s guide notes that employers “must register with the local tax agency” and report each employee for social security.

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Cost of Entity Setup

Forming a Spanish company (e.g. SL) involves moderate costs. Notary and registry fees are roughly €400–€600; a minimum capital of €3,000 is required (for an SL), though small (“Nueva Empresa”) structures can reduce this. Legal/accounting assistance often adds a few thousand euros. Ongoing compliance costs include bookkeeping, annual accounts, and hefty labor taxes: Spanish employers pay about 30% of salary on top in social contributions. Overall, the administrative burden is heavier than in many Eastern European countries, though lighter than France or Germany.

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What Hiring Through an EOR Means in Spain

An Employer of Record (EOR) in Spain becomes the legal employer registered with Spanish tax, Social Security, and labour authorities, while the employee works exclusively for your company. You retain operational control over work and performance, while the EOR assumes responsibility for all employer obligations under Spanish labour and tax law.

Spain is a high-protection labour market. Employment is governed by:

• Workers’ Statute
  
• Collective Bargaining Agreements (Convenios Colectivos)
  
• Mandatory Social Security system
  
• Labour court enforcement
  

Foreign companies cannot legally employ staff in Spain without:

• A Spanish employing entity
  
• Registration with Social Security and tax authorities
  
• Compliance with the applicable convenio
  

An EOR provides this employer infrastructure without requiring you to establish a Spanish company.

An EOR in Spain handles:

• Workers’ Statute–compliant contracts
  
• Convenio selection and classification
  
• Payroll processing in EUR
  
• Income tax withholding
  
• Social Security contributions
  
• Mandatory benefits and bonuses
  
• Statutory leave and public holidays
  
• Termination and severance handling
  
• Labour court exposure management
  

This model works best for companies that want to hire in Spain without managing convenios, payroll charges, and rigid termination law directly.

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Risk Involved in Both Models

Spain’s labour system is court-driven and employee-protective.

Key characteristics:

• Written contracts required
  
• Most roles governed by convenios
  
• High mandatory social charges
  
• Termination requires legal justification
  
• Labour courts actively enforce rights
  

Compliance failures can result in:

• Reinstatement or heavy compensation
  
• Back pay of wages or benefits
  
• Social Security penalties
  
• Union disputes
  

In Spain, termination and payroll charges are the biggest employer risks.

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EOR Vs. Entity: When to use What?

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Why is an EOR the Most Efficient Way to Hire in Spain?

Spain offers strong talent in engineering, design, operations, and customer support but employment is governed by collective agreements and rigid termination law.

An EOR is not just payroll. It is the legal employer recognised by Spanish authorities, responsible for:

• Labour law compliance
  
• Convenio interpretation
  
• Payroll and social charges
  
• Termination execution
  

This allows foreign companies to operate in Spain without inheriting union exposure and labour-court risk.

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#1. EOR Manages Convenio Classification Risk

Most Spanish employees fall under a Convenio Colectivo, which defines:

• Minimum salary
  
• Job categories
  
• Working hours
  
• Overtime and bonuses
  
• Leave and allowances
  

Misclassification under the wrong convenio or category can trigger years of underpayment liability.

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#2. EOR Eliminates Social Security & Payroll Errors

Spanish employment cost is driven by high employer social charges, not just salary.

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Incorrect payroll can lead to:

• Multi-year back payments
  
• Heavy penalties
  
• Labour inspections
  
  

#3. EOR Controls Termination & Labour Court Risk

Spain does not allow easy termination. Employers must prove:

• Objective or disciplinary cause
  
• Procedural correctness
  
• Proper severance calculation
  

Wrongful termination can result in:

• Reinstatement
  
• 33 days’ salary per year of service compensation
  
• Additional damages

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#4. EOR Avoids Entity & Bureaucratic Overhead

Setting up a Spanish entity requires:

• Company registration
  
• Social Security registration
  
• Payroll systems
  
• Labour inspector interactions

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EOR vs. PEO in Spain: How to Decide the Right Hiring Model?

A PEO in Spain cannot legally employ workers. A Spanish employing entity is required.

• PEO: HR/payroll support only
  
• EOR: Legal employer

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Key question:

Do you want to be exposed to Spanish labour courts and Social Security audits?

If not, EOR is the correct model.

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Payroll, Taxes, and Monthly Compliance

Spanish payroll is run monthly. Employers must deduct and remit: (1) Employee income tax (IRPF) – withheld at rates depending on each employee’s bracket, and (2) Social Security contributions – typically about 6.4% of gross from the employee and ~29–30% from the employer. Social contributions cover healthcare, pensions, unemployment, and workplace accidents. Employers file a monthly Social Security report (Modelo FAN) and a quarterly IRPF return (Modelo 111) to the Tax Agency, summarizing withholdings. By law, employees are entitled to detailed payslips showing gross pay, IRPF withheld, social contributions (both shares), and hours worked. Compliance requires strict timeliness; late payments or filings incur penalties.

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Salary Structure: Where Most Compliance Issues Begin

Major compliance pitfalls in Spain involve miscalculating severance and benefits and misapplying CBAs. For example, statutory severance is 20 days’ salary per year of service (capped at 12 months) for ordinary dismissal. Employers often err in calculating this amount or in determining if dismissal is “fair” or not, which can double the severance. Spanish law also mandates precise calculation of overtime pay and holiday accruals. Since wages are frequently negotiated at the CBA level, using the wrong salary schedule or not accounting for seniority can cause underpayment. In short, errors typically occur when employers apply the wrong collective wage scale or miscalculate termination costs.

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What Monthly Payroll Operations Actually Involve

Each month, a Spanish payroll run consists of: recording worked hours (including overtime), computing gross wages, subtracting IRPF tax and the employee’s Social Security share, and adding the employer’s Social Security share on top. Payslips (nóminas) are issued to employees in Spanish. The employer then remits the withheld tax to the Agencia Tributaria and both shares of Social Security to Tesorería General de la Seguridad Social. In addition, quarterly tax filings (Modelo 111/190) summarize all income tax withholdings. Essentially, operations involve accurate data input (e.g. new hires, absences, bonuses), running payroll software, and timely electronic filing of tax and contributions. Using an EOR or payroll service helps ensure these steps comply with Spanish law every pay cycle.

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Step-by-Step Onboarding Process With an EOR in Spain

Hiring in Spain is a registry-driven, inspection-sensitive process.

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1. Confirm Social-Security-Registered Employer

Verify EOR registration with:

• Social Security (TGSS)
  
• Tax authorities
  
• Labour inspectorate
  
  

2. Identify the Correct Convenio

EOR determines:

• Which convenio applies
  
• Which job category fits the role
  
• Minimum salary and benefits
  

Wrong selection creates automatic underpayment liability.

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3. Structure Role and Pay Model

Validate:

• Working hours
  
• Overtime rules
  
• Bonus and allowance structure
  
• Fixed-term vs permanent legality
  
  

4. Request Full Cost-to-Company Breakdown

Includes:

• Gross salary
  
• Employer Social Security
  
• Employee deductions
  
• Tax
  
• EOR fee
  
  

5. Generate Convenio-Compliant Contract

Contract includes:

• Job category
  
• Salary and bonuses
  
• Working hours
  
• Probation
  
• Termination and notice
  
  

6. Register Employee Before Start Date

EOR registers:

• Contract with employment authorities
  
• Social Security enrollment
  
• Tax withholding setup
  

Late registration is illegal employment.

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7. Start Payroll and Reporting

Monthly:

• Payroll
  
• Social Security filings
  
• Tax reporting
  
• Payslips
  
  

8. Ongoing Compliance and Inspections

EOR manages:

• Labour inspections
  
• Convenio updates
  
• Contract amendments
  
• Termination process
  
  

Build Your Spain Team with Bolto EOR

Expanding into Spain is not just about talent, it is about surviving heavy social charges, convenios, and labour courts.

Bolto’s Employer of Record model absorbs:

• Convenio complexity
  
• Social Security risk
  
• Payroll and tax exposure
  
• Termination liability
  

So you can build teams in Spain without becoming a legal employer.

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Local Labour Compliance, Fully Managed

Bolto handles:

• Convenio-compliant contracts
  
• Job category mapping
  
• Payroll and social charges
  
• Tax filings
  
• Labour authority interactions
  

You control performance, Bolto carries statutory employer liability.

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Hire Without Entity Setup or Labour-Court Exposure

With Bolto EOR:

• Hire in weeks
  
• Avoid company setup
  
• Exit without entity closure
  

Ideal for:

• Market testing
  
• Distributed teams
  
• Controlled expansion
  
  

Transparent Costs, No Compliance Surprises

Bolto provides:

• Employer and employee charges
  
• Net salary clarity
  
• Fixed EOR fees
  
  

Full Employee Lifecycle Support

Bolto manages:

• Contract drafting
  
• Social Security updates
  
• Payroll and tax
  
• Leave tracking
  
• Lawful termination
  
• Labour-court support
  
  

Built for Risk-Controlled Growth in Spain

Spain penalizes:

• Wrong convenio selection
  
• Underpaid social charges
  
• Late registration
  
• Improper termination
  

Bolto enables growth without inheriting labour-court and Social Security risk.